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Monday, 01 April 19
FORCE MAJEURE SUCCESS NOT A SEA CHANGE - BALTIC EXCHANGE
 KNOWLEDGE TO ELEVATE
It is difficult to successfully argue that contractual performance has been prevented or delayed by force majeure. This is in part because English courts or arbitration tribunals will interpret these clauses strictly and narrowly against the party seeking to rely on them.
Recent decisions, including Triple Point Technology v PTT (2017) and Seadrill Ghana v Tullow Ghana (2018), are evidence of this approach. However, Sucden Middle-East, represented by Nick Fisher of HFW, has recently relied successfully on such a clause in the Commercial Court, on appeal from arbitration.
The case, Sucden Middle-East v Yagci Denizcilik Ve Ticaret Limited Sirketi, “The Mv Muammer Yagci”, involved a shipment of sugar to Algeria on the Sugar Charter Party 1999 form. The facts found by the arbitral tribunal were that when the cargo arrived in Algeria, the cargo-receivers submitted false import documents to local customs authorities. The local customs responded by seizing the cargo, using powers under customs laws and regulations.
A delay to discharging the cargo of four and a half months ensued. Sucden, as charterers, claimed this delay fell within the exceptions to laytime running under clause 28. Owners disagreed. At first instance, the arbitral tribunal agreed with owners.
Charterers appealed to the Commercial Court. Permission to bring the appeal was given on the basis that the question of law was one of general public importance, as it related to a standard form contract in wide commercial usage.
The judgement
The question before the Commercial Court was: “Where a cargo is seized by the local customs authorities at the discharge port causing a delay to discharge, is the time so lost caused by ‘government interferences’ within the meaning of clause 28 of the Sugar Charter Party 1999 form?” Clause 28 reads:
“Strikes and Force Majeure
In the event that whilst at or off the loading place or discharging place the loading and/or discharging of the vessel is prevented or delayed by any of the following occurrences: strikes, riots, civil commotions, lockouts of men, accidents and/or breakdowns on railways, stoppages on railway and/or river and/or canal by ice or frost, mechanical breakdowns at mechanical loading plants, government interferences, vessel being inoperative or rendered inoperative due to terms and conditions of employment of the Officers and Crew, time so lost shall not count as laytime on demurrage or detention…”
In deciding whether a force majeure event had occurred, the Court focused on the construction of “government interferences”. It was fairly straightforward to establish that a government entity acting in a sovereign capacity was involved, but owners argued that the government being involved was not enough and that there had to be “interferences”. In reaching its decision that there had been no interference, the tribunal had considered it a key point that seizure was an “ordinary” action. The Court rejected this conclusion. It held that the seizure of the cargo was not routine and did fall within the meaning of “interferences”. Seizure is a significant exercise of executive power and therefore could not be regarded as “ordinary”. Suspected or predictable consequences are not the same as ordinary actions (such as the inspection of the cargo by a government surveyor): “In the usual course of things, cargo is not seized and property rights are not invaded in that way.” The very fact that false documents were involved showed that the circumstances were not routine.
The Court emphasised that it was of “real importance” that its conclusion on the language was not difficult to apply, nor did it in any way offend commercial common sense.
The owners’ causation argument was also dismissed, as it was held that the seizure caused the delay, even if the submission of false documents caused the seizure.
Further detail
In allowing the appeal, the Court still maintained the strict and narrow approach to force majeure, stressing that “the answer given to the question is only a narrow ‘yes’. It is ‘yes’ where the circumstances are as in the present case. The answer does not address all of the circumstances that may come within or fall outside clause 28. The answer is concerned only with the seizure of a cargo and with that seizure by a customs authority that is a State revenue authority acting in a sovereign capacity”.
This judgment gives some welcome publicly-available guidance on the interpretation of a force majeure clause in a standard form widely used in sugar trading. While the charterers were successfully able to rely on the force majeure clause in this case, it does not signal a change in the strict and narrow approach typically adopted by the English courts.
Source: Baltic Exchange
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Friday, 16 September 22
WHEN IS A VESSEL'S INCOME EARNING CAPACITY AT RISK? 'CONTROLLED INCOME CAN BE A KEY OF SUCCESS' - MARASCO MARINE
Managing marine risks is not an easy task, which requires special knowledge and expertise on the subject per se. Customarily, big ship management c ...
Friday, 16 September 22
DRY BULK MARKET: EU’S BAN ON RUSSIAN COAL LIFTS DEMAND DESPITE ECONOMIC HEADWINDS - BIMCO
Highlights
– The Baltic Exchange Dry Index (BDI) peaked in late May and has since fallen sharply as lower Chinese demand and adverse glob ...
Friday, 16 September 22
BIMCO EMBARKS ON NEW STANDARD FOR “QUIET ENJOYMENT”
KNOWLEDGE TO ELEVATE
A newly set-up BIMCO drafting team involving a cross-section of shipowners, charterers, financing and leasing i ...
Friday, 16 September 22
INDIAN COAL PRODUCTION TO RISE 150 PER CENT IN 10 YEARS: CENTRE - EXPRESS NEWS SERVICE
The Union Ministry of Mines is expecting 150 per cent growth in coal production 10 years down the line as a result of coal reforms that had been us ...
Thursday, 15 September 22
MARKET INSIGHT - INTERMODAL
While the Organization of Petroleum Exporting Countries and its allies agreed on a 100,000 b/d output cut last week, oil flows are in the spotlight ...
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- PowerSource Philippines DevCo
- Attock Cement Pakistan Limited
- Central Java Power - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Mercuria Energy - Indonesia
- Mintek Dendrill Indonesia
- Ministry of Transport, Egypt
- Central Electricity Authority - India
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- International Coal Ventures Pvt Ltd - India
- Sakthi Sugars Limited - India
- Bharathi Cement Corporation - India
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- Electricity Generating Authority of Thailand
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- Bhushan Steel Limited - India
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- Larsen & Toubro Limited - India
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- Energy Development Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Madhucon Powers Ltd - India
- Baramulti Group, Indonesia
- Chamber of Mines of South Africa
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- Jindal Steel & Power Ltd - India
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- Eastern Coal Council - USA
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- Billiton Holdings Pty Ltd - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indonesian Coal Mining Association
- GAC Shipping (India) Pvt Ltd
- SMC Global Power, Philippines
- Thiess Contractors Indonesia
- Goldman Sachs - Singapore
- Posco Energy - South Korea
- Leighton Contractors Pty Ltd - Australia
- Agrawal Coal Company - India
- Petrochimia International Co. Ltd.- Taiwan
- European Bulk Services B.V. - Netherlands
- Aditya Birla Group - India
- CNBM International Corporation - China
- McConnell Dowell - Australia
- Coalindo Energy - Indonesia
- Salva Resources Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Maharashtra Electricity Regulatory Commission - India
- Minerals Council of Australia
- Gujarat Electricity Regulatory Commission - India
- Kaltim Prima Coal - Indonesia
- Manunggal Multi Energi - Indonesia
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- Xindia Steels Limited - India
- Medco Energi Mining Internasional
- Antam Resourcindo - Indonesia
- Siam City Cement PLC, Thailand
- Kapuas Tunggal Persada - Indonesia
- Indo Tambangraya Megah - Indonesia
- Romanian Commodities Exchange
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- San Jose City I Power Corp, Philippines
- Commonwealth Bank - Australia
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- Toyota Tsusho Corporation, Japan
- Ministry of Mines - Canada
- Star Paper Mills Limited - India
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- Bukit Makmur.PT - Indonesia
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- Heidelberg Cement - Germany
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- Bulk Trading Sa - Switzerland
- Altura Mining Limited, Indonesia
- Economic Council, Georgia
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- South Luzon Thermal Energy Corporation
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- Thai Mozambique Logistica
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- The State Trading Corporation of India Ltd
- SN Aboitiz Power Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Kideco Jaya Agung - Indonesia
- Vizag Seaport Private Limited - India
- Therma Luzon, Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indika Energy - Indonesia
- Videocon Industries ltd - India
- Mercator Lines Limited - India
- Intertek Mineral Services - Indonesia
- Energy Link Ltd, New Zealand
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- Bhatia International Limited - India
- Parliament of New Zealand
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- Power Finance Corporation Ltd., India
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- White Energy Company Limited
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- Bangladesh Power Developement Board
- Indian Energy Exchange, India
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- India Bulls Power Limited - India
- Port Waratah Coal Services - Australia
- Directorate Of Revenue Intelligence - India
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- Aboitiz Power Corporation - Philippines
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- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Business Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
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- Bukit Asam (Persero) Tbk - Indonesia
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- Holcim Trading Pte Ltd - Singapore
- IEA Clean Coal Centre - UK
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- Timah Investasi Mineral - Indoneisa
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- Straits Asia Resources Limited - Singapore
- Asmin Koalindo Tuhup - Indonesia
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- Wilmar Investment Holdings
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- Uttam Galva Steels Limited - India
- Africa Commodities Group - South Africa
- Kobexindo Tractors - Indoneisa
- Coastal Gujarat Power Limited - India
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- Petron Corporation, Philippines
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- Lanco Infratech Ltd - India
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- SMG Consultants - Indonesia
- Price Waterhouse Coopers - Russia
- Globalindo Alam Lestari - Indonesia
- Indian Oil Corporation Limited
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